Avandia Sales Away

Even as the dust settles surrounding the publication of Dr. Steven Nissen's meta-analysis on Avandia's safety risks in the New England Journal of Medicine (NEJM), the jury is still out on the merit of the science. And even though GlaxoSmithKline's market capitalization plunged $14 billion in 48 hours—and analysts are forecasting that the company will lose more than a billion dollars—it seems the industry's only definitive lesson coming from Avandia is in the market's reaction to the news.

It's not the first time we've seen the market overreact to news of negative side effects. Media coverage seems to drive this response by presenting research results without much context and, in the process, scaring patients. But what may be surprising, as is the case with Avandia, is the complexity of the dynamics that underscore that reaction. Physicians don't tend to change prescribing behavior based on one-off studies. However, they are willing to accommodate patient requests—particularly because they're afraid of being sued. And when patients hear news from incomplete media reports, they react easily and are likely to request a switch to another drug. Because of this relationship, companies can expect drastic changes in behavior when a blockbuster drug gets a bad rap—deservedly or not.

Understanding the market's reaction to adverse events is going to be particularly important as regulators and other parties demand more safety studies—and even begin to conduct them on their own. In particular, companies must learn how to communicate with their customers and fend off their competitors, as news of safety issues will increasingly drive market dynamics in the future.

Here's What Happened & Why

Until the launch of Byetta in May 2005, the market for oral diabetes treatments had essentially been a two-horse race between Takeda's Actos and GSK's Avandia franchises. Metformin, the gold standard, had long since gone generic, and Takeda and GSK were the only companies actively promoting to physicians in the type 2 diabetes space. Then, in October 2006, Merck introduced Januvia, dramatically raising the category's competitive intensity. However, diabetes is a progressive condition that is managed primarily through a combination of therapies, and even though it was buffeted by the new launches, Avandia was still a key element of the physician's armamentarium.

The May 21, 2007, NEJM publication of Avandia's cardiac risks really shook up the market. To understand exactly how, we monitored our panel of approximately 2,000 primary care physicians (PCPs) and 150 endocrinologists to analyze the change in new written prescriptions (NWRx), where there is the true growth potential for drugs. NWRx takes into account scrips that are new starts, add-on therapies (which are particularly important given the frequency of combination treatment), and switches for existing patients.

Avandia Prescribing Plunges

The chart "Avandia Prescribing Plunges" illustrates physicians' type 2 diabetes drug prescribing before and after the Avandia meta-analysis. As the chart indicates, physicians seemed to be getting wind of the information a few days before May 21, when NEJM first posted Nissen's data on its Web site. Avandia's NWRx share among PCPs went from 14 percent before the study's publication to less than 5 percent, a decrease in absolute share of about 9 percent.

Physician Pulse-point What were doctors and their patients thinking? And how did the Avandia sales team and its competitors respond to the news? In addition to looking at NWRx, we surveyed 230 PCPs and 60 endocrinologists, with a screening criterion being any past Avandia prescribing.